Posted
by
kdawsonon Thursday December 06, 2007 @10:54AM
from the free-flow-of-people-and-ideas dept.

An anonymous reader writes "Techdirt has an interesting look at how non-compete agreements are like DRM for people, doing just as much damage to innovation as DRM has done to the entertainment industry. It includes links to a lot of research to back up the premise, including some studies showing that Silicon Valley's success as compared to Boston's can be traced in part to the fact that California does not enforce non-compete agreements."

Non-compete has existed for decades, long before DRM. It would make a lot more sense to reverse the comparison, but some people have no concept of what came before their own awakening to the ways of the world...

That non-compete agreements are damaging is well known to anyone with any economic understanding, a market economy is based on competition. If you take that away, you are left with something as even worse than the old communist economies. A planed economy without the planning part.Whether you call it anti-compete agreements, guilds, trusts, or five year plans, the result is the same. Short time gains for a few, long time economic stagnation for everybody.

The strongest arguments against DRM are not economic, but moral, and concerns the loss of consumer rights.

Trying to define the "strongest" arguments is itself an additional layer of value judgment, but setting aside that, one should not underestimate the various economic arguments against DRM.

Just to cite one example, the recording industry slit their own throats when they got the Audio Home Recording Act to legislatively mandate DRM be included in all new audio recording devices. It strangled the audio hardware industry, which in turn strangled music sales. The Audio Home Recording Act's imposed DRM in Digital Audio Tape and in the Minidisc and in all technology for an entire decade. It effectively exterminated all new devices and strangled hardware sales and strangled music sales for an entire decade. People sat around holding onto their CD collection and NOT buying (or re-buying) music on DAT formate and Minidisc formate or anything else, because no one owned or wanted a DAT player and no one owned or wanted a Minidisc player or anything else. The DRM-extermination of all hardware and formats since the CD is one of the major contributing factors in declining Recording Industry sales numbers.

The hardware industry was economically devastated and by direct follow-on the content industry economically harmed by DRM for an entire decade. It was only with the introduction of the MP3 player that ANY economic and technological advance has been possible in the audio hardware industry (and the far far too lagged sale of MP3 content), and the sole reason it was possible for the MP3 player to break that DRM-imposed economic wasteland is that the MP3 player slipped through a loophole in the Audio Home Recording Act's DRM mandate. The sole reason that we are seeing economic and technological stimulus in the hardware industry... and the all too delayed stimulus in music industry innovation and sale of old and new content in MP3 format... is exactly because of the escape from the negative economic effects of DRM.

I certainly agree with the "moral" consumer arguments against DRM, but don't let the situation sound like some wishy-washy "moral" anti-DRM battle against pro-DRM economics.

But DRM is understood to be worthless, contemptible, and without value. Now that we've come to an understanding about that, it could be considered worthwhile to compare it to other things that exist, to see if our new understanding about one aspect of our world has any implications on other aspects of it. So the comparison is working in the right direction after all.

Seriously. The reason it took Morimoto a long time to open up a restaurant in NYC was because his former restaurant (for which he was not the head chef) had a non-compete clause. He could not open up a restaurant within NYC for a specified number of years. So he opened his flagship restaurant in Philadelphia, and only recently has opened up a restaurant in NYC.

Florida is great. I'd have to actually leave & take my current employer's customers with me for them to have any chance of enforcing a non-compete here. I think this holds true in most right-to-work states.

I don't think it's defined per state. My non-compete says that I can't solicit any of their clients for 2 years for any work. As long as I don't snatch up someone they've been working with the non-compete doesn't inhibit any of my actions.

Yes, state by state.Some states will enforce non-compete clauses, others will not (on the basis that an employer cannot deny you the right to make a living in your skilled profession, rendering the non-compete clause null and void).

I'm not an expert in the subject, but a do not "solicit any of their clients for 2 years" is less severe than some other non-compete contracts, and that clause might be upheld in some cases and in some states that might nullify a contract whic

How does right-to-work laws apply to non-compete agreements? To quote wikipedia, right-to-work laws "prohibit agreements between trade unions and employers making membership or payment of union dues or 'fees' a condition of employment, either before or after hire." Unless Florida has added more to the concept of a right-to-work law.

But then the company also has to pay your wages in full during the non-compete period and a generous severance beyond that period.

That's going a bit far. If you quit, why should they pay you severance? The wages during the non-compete period I could see, but what's to prevent an employee from quitting specifically to exploit this? Hot dog! My employer had me sign a four-year non-compete agreement, time for me to go get a master's degree!

Your suggestion is not well thought-out, unless your purpose is really to say "non-competes are okay as long as we make sure that no sane company would ever ask anyone to sign one".

And no sane person would ever sign one...I mean you work in a given industry doing a given job, if you move companies chances are your going to be doing the same or a similar job because thats where your skill set lies. A no compete clause, if even enforceable (they are illegal in some countries, restriction of trade) basically prevents you getting a job doing whatever it is you do for the duration of the clause.Therefore, an employer making you sign such an agreement should have an obligation to pay you fo

The only response to that is by a non-compete reversal: If the company deems that you are too valuable, they SHOULD pay you to not work. After all, it is a contract, which means for a certain loss, there almost always is the opposite gain in another way.

Lets see... yada yada yada.... according to this clause if I am terminated or I quit I cannot do this same job working for someone else for the next X years. OKEY DOKEY! No problem! I'll sign it right away, I'll just add this other clause in here:If I am terminated or I quit then your company cannot hire any other programmer during said term.

Your suggestion is not well thought-out, unless your purpose is really to say "non-competes are okay as long as we make sure that no sane company would ever ask anyone to sign one".

Having been under a few, and had to fight one, and won with prejudice I can can say most non-competes are rope around your neck documents. Often they want you to sign after accepting the job or change rules 3 years into employment. Puts people in the situation of having to comply or be on the outs. Fortunately where I live,

That's going a bit far. If you quit, why should they pay you severance? The wages during the non-compete period I could see, but what's to prevent an employee from quitting specifically to exploit this? Hot dog! My employer had me sign a four-year non-compete agreement, time for me to go get a master's degree!

I don't see a problem with people exploiting this. After they've done it enough times, it'll become obvious that they are a scammer and then will become either non-employable or unfit to work with t

> That's going a bit far. If you quit, why should they pay you severance?

Because the value of you *not* working for the competition is more worth to the company than the money in question naturally. It system is actually in use for the upper levels of management, where the people are too smart to sign a non compete agreement with no compensation. It is a significant part of what's behind Golden handshakes.

The problem is that most engineers are lousy businessmen, and thus willing to sign away something

I think it's reasonable for a company to have a contract that is a non-compete if the employee decides to leave and a non-compete + compensation if the employer dismisses them. It isn't reasonable that an employee should be able to get a job for a few months, then quit and have the employer pay them for years because of the non-compete agreement. If an employee in a non-compete decides to leave, presumably they have something else in mind.

It's that simple... If a company wants you to sign such an agreement, it says alot about the corporate culture of that company. It means management thinks it completely owns the people who work for them.

It could also mean some people have already left the company to work for competitors and they're trying to protect themselves from this happening again. That tells me it's probably not a nice place to work at, if people leave to go and do the exact same job somewhere else!

Most non-compete agreements are an HR issue more than a real management initiative. Having been on both sides of the argument, up close and personal, I have to say that I prefer California's interpretation. At-will employment and non-compete agreements have no place together.Now, if an employer and employee have the expectation that it is a lifetime engagement and not something terminated at the whim of a quarterly profit projection, a non-compete agreement is much more logical. Not a whole lot of indivi

Here in British Columbia the courts have held that a signed non-compete agreement can only be enforced for as long as the company pays the full termination salary of the non-competee. If they won't pony that up, then they can't stop you earning a living with your skills as you see fit.Far as I'm concerned, that's the PERFECT legal interpretation of a non-compete agreement. You can pay me full salary to do nothing, or you can piss off and stay out of my way; hey, sure, take your pick, ex-boss!

"dont sign" is not always an option. my first job out of school was at a proprietary trading firm where we did not have non-competes. at the end of my second year, we were presented non-compete forms which we were REQUIRED to sign in order to have our bonuses disclosed to us. in that industry, your bonus can be anywhere from 50-90% (or more) of your total pay, so I would have been forgoing a lot of cash by not signing. pretty much extortion, yes, but thats the biz.

it's all an example of the corporatization of our creativity and our cultureit's sort of the opposite of communism, where it was believed that by expelling selfishness as a motiviation in life, all will be enriched. when in reality, communism just makes all of society as poor as its poorest member, as selfishness is a motivation to succeed and do better, and this enriches society in indirect ways

meanwhile, business law thinkers know that innovation is the wellspring of all of their profits. so the idea is t

Absolutely, moreover, if you manage your capitalistic corporation in a communist way (everyone except the leaders get crappy pay, and they better have to thank us), people either don't want to innovate or don't work to innovate FOR YOU.

As said by Gibbons in Office Space: "It's a problem of motivation, all right? Now if I work my ass off and Initech ships a few extra units, I don't see another dime; so where's the motivation?"

human nature is paradoxically selfless and selfish at the same timeso any social system: a government, a legal structure, that attemptes to straightjacket human nature as totally selfish or totally selfless fails, because it misses half of human nature. a legal structure must attempt to reflect the nature of the human beings it is forced onto as much as it can. if you instead try to force human nature into unnatural simplistic assumptions, you are automatically weakening the social structure, and the lives

It seems to me that non-competes are a classic example of what economists refer to as the Tragedy of the commons [wikipedia.org]. For any individual company it makes sense to get your staff to sign a non-compete, to stop them taking elsewhere the knowledge you've paid them to acquire. For a technology cluster as a whole (e.g. Silicon Valley or Route 128) the overall effect is negative due to stagnation in the workforce. The problem is that existing firms don't have an immediate incentive to worry about stagnation in start-ups; they are more concerned about loosing good employees to their competitors.

The Tragedy of the Commons crops up all over the place - the most frequently seen cases are things like over-exploitation of natural resources. Generally there are only two ways to deal with the problem; one is to legislate against the behaviour that is detrimental in the longer term and the other is to convince the players to take a longer term view. What's interesting about this debate is that there are people who do have a longer-term interest as well as some sway over the companies: the venture capital firms that invest in not just one start-up but many start-ups over a period of time. They have an incentive to make the environment the best for all companies to thrive. I hope Bijan Sabet manages to convince a few more of them!

And isn't it peculiar how when you leave FutureTek Inc to join TeknoFuture Inc, that your new employer never cares if you have - or respected - a non-compete with your previous employer, while at the same time falling over themselves to make you sign one with them.

Yeah, because those stupid statisticians at Stanford etc. don't consider other variables when they do their statistical analysis

For example - from the article.Gilson looks at a few of the other possible explanations for the difference and shows how they're all lacking, leaving the difference in noncompetes as being the key difference between the two regions in terms of the flow of information and ideas leading to new innovations.

You can even follow through and read the sources linked from the original articleeg.http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508

Why are people on the internet always so eager to think that highly qualified economists at world class Universities will have failed to consider the one blindingly obvious thing to consider about a situation, simply based on reading a one line summary of the relevant paper, in order to prove some clearly stupid point?

Why are people on the internet always so eager to think that highly qualified economists at world class Universities will have failed to consider the one blindingly obvious thing to consider about a situation, simply based on reading a one line summary of the relevant paper, in order to prove some clearly stupid point?

I call it the "101 phenomenon." It goes something like: "Any moron learned in physics 101 that that's not possible..." Or "This is statistics 101 stuff, what a bunch of idiots..."

People take course XXX 101 and think they are now experts. When in fact, the true experts took not only 101, but 201, 301, 401, and probably all the way to "40001." And then they TAUGHT each of those classes. And then they wrote a book on it. They know all the little places where XXX 101 actually made simplifications or glossed over complex topics, or made statements that were NOT strictly true but did so for the sake of teachability. In other words, they know so much more than you do that they already thought of your petty objection within the first microsecond and addressed it not much more than a millisecond later. They counter your objections in their sleep, with no conscious effort -- literally.

Usually the hard science is left out of the reporting. That doesn't mean it isn't there. But everybody loves to be an expert just because some journalist worded something badly or took it out of context. If your exposure to a topic is only "101 level," you really have no clue at all and certainly no basis to make a meaningful criticism.

Having worked almost all of the 19 years of my professional career in Boston, only once have I ever been asked to sign a noncompete agreement. Before signing it, I checked with a few professionals (including, informally, a lawyer) and was told that it could only apply if I voluntarily left the employer with whom I had the agreement to go to a competitor, and it only applied for 3 months anyway.

People don't like to compete. People like to win. People are forced to compete in order to win. Competition brings out the best in people. Given a choice between competition and a guaranteed win, people will almost always go for the guaranteed win.

Patents, non compete agreements, and organized crime are all designed to provide an automatic win without the need for competition.

taken care of in the manner of one trade secret at a time. Every time that you, as an employee, are exposed to information deemed a 'trade secret' then the employer should have you sign a specific agreement on THAT piece of information. The catch all non-compete is like agreeing to binding arbitration. Both are overly broad, and designed to give the other party the upper hand in all cases where the future brings conflict. Making such a promise is no more enforcible than the marriage vows many people take. Marriage was once viewed higher than today, but today, you can get a divorce with little or no real effort. The same should be for any particular 'business agreement' where money has not exchanged hands.

That is to say that if a court can find in favor of the non-compete agreement, you should be able to get a divorce, or sue for compensation. I do not know if this has been tested, but I'd bet a couple of court cases is all that would be required to break that camel's back.

Advice for EVERYONE: Don't sign these things, ever. Never, ever sign a non-compete. Just don't do it. I did and luckily it wasn't a super-long term. Also, if a company forces you to use a non-compete, find out BEFORE accepting the job offer. If a company that you've been working for comes along and asks you to sign it, call your lawyer immediately.

Every "non-compete" agreement that I have ever signed or given someone to sign is first and foremost a statement of ethics. The employee understand they are going to have some valuable materials at their disposal and to either share these with a competitor or to run out and start a business using them would be unethical. And possibly lead to legal sanctions.The second part is assignment of inventions which is almost alway completely separate. Or at least it should be. If you are employed in a "creative"

Wow. Just wow.The second part is assignment of inventions which is almost alway completely separate. Or at least it should be. If you are employed in a "creative" capacity where it is your job to come up with new things, do you honestly believe that you should have the right to (a) come up with something new that is within the scope of your job, (b) quit, and (c) form a new company to exploit this new idea?

If it's a non-patentable idea, then absolutely, yes. If it's patentable, there's no problem to begin

...unless you're some key scientist at a major corporation.For "average" techies who have to sign them, how do they know where you go to work when you quit and how much effort will they put forth to actually enforce it?

I work for a small consulting company (20 people) and they made new guys sign non-competes and tried to get existing employees to sign them (I said sure, for $10k consideration and a full salary and benefits guarantee during my non-compete period, they said not to worry about it then).

I have dealt with this before. My lawyer told me that only one or 2 of these cases have ever made it to the court. Judges throw these cases out as soon as they see them. Your previous employer cannot tell you where you can and cannot work. It is taking away your ability to earn a living.
I had worked for a company for 2 years, went to their direct competitor for more money for a year, then came back to the first company. Both times I got a very official and long letter from the former company's law firm chastising me about the non-compete and asked me to respond within a certain time limit to some questions in the hope that I would write something that was actionable. Both times I ignored the letters, the time limit came and went, and nothing further happened.
I have a friend who was in a similar situation and his former company decided to press the issue. It never made it to court, judge just threw it right out.
I believe that the only way that a non-compete can be enforced is if the company can show significant monetary damage has occurred.
Working for whomever you want is still perfectly legal in the USA!

I see at least one essential difference between DRM at non-competes. Where both non-competes have a limited lifetime and thus eventually will stop holding you back, DRM makes your content inaccessible for _ever_.

To contrast the horror stories of noncomplete clauses, the company I work at (large insurance company) has written into their contract that anything I do at home is explicitely mine, and if I want another job after this one, I am only restricted from using customer data and source code from here when I go there, which is perfectly reasonable.

My take on these is that if I leave on my own to seek a better job I might be subject to the terms of such an agreement. OTOH, if I'm laid off of fired for some BS reason (such as to save money), I would consider any such agreement I might have signed null and void.

One outfit I interviewed with was wanting me to sign an agreement which stipulated, among other things, that I not work for any competing companies for a year after termination of employment with them, even if they fire me. I balked. They withdrew their offer. A few years later, they shuttered their operations here.

Is this enforceable? I don't know. But the way I look at it, if they're doing stuff like this during the interview process, what will they be like later?

According to my wife's business law class, a NCA is largely enforceable only under certain conditions. Market location, trade secrets, and client base are the major factors. For example, if I work for a small advertising shop in Florida, which only works within the Florida market, and I move to Washington (state), an NCA would be nonsense, even if I signed it. It would prevent a reasonable expectation to earn a living. Now, if I worked for Microsoft (as if) and left to work for Apple (yay!), an NCA would probably be enforceable.

One thing I have noticed is NCAs being employed in places you wouldn't expect them. My son went to work for a local paintball field as a game helper and referee. This is a small-time outfit operating out of some guy's house. He had to sign an NCA. He showed it to me and I just laughed.

The company I work for made me sign an agreement before I was hired. Anything I do or create belongs to them while I am at work or even if I create something that deals with my industry on my own time, it's theirs. This post...yea... belongs to them.

And I'm in the process of trying to negotiate that BS line away in an employmentagreement I got presented.

There is no way I will sign an agreement of that nature without serious modifications.I've walked away from contract gigs in recent times where the client's HR outsourceinsisted that I couldn't start work without signing the document and that there wouldbe no modifications to the document (Effectively dismissing me before I even started-the hiring manager went into a panic and went charging around to get permission toget me to submit an amendment to the agreement that protected their interests, butby that point in time, I'd already got another comparable contract and was off thehook from the other. Don't play games with me. You wouldn't tolerate this stuffout of me, I won't tolerate it out of you as an employer.

In the end, it's standard boilerplate and it's from businesses or their lawyersthinking they're "clever" and trying to avoid losing anything that might be theirs.The problem is, for me, it IS indentured servitude- and they're in no way even remotelypaying me enough to lay claim to everything I might come up with, nor could they.The HR people all invariably say "that's not what we're intending"- BULLSHIT. If youintended otherwise, you would have put it in the agreement- what is on the paper iswhat you intended. If it's not, you need to fire your damn Counsel and find one thatwill do what you actually intend.

That one is particularly easy, cross out the relevant part of the contract, and write "what they were intending" in the margin.

If have never personally experienced problems with modifying the contracts, usually the "hiring officer" will accept them. The same laziness that makes most people accept the outrageous contracts, also works on the people on the other side of the fence.

When I worked at Microsoft, the contract had a clause to that effect. I did sign it because it had another clause which gave me ways to protect work I did on my own time-- If there are options for moonlighting, you can negotiate a right to start your own business and keep all the IP of that business to yourself.

That is indeed unfair, but it will be quite happily accepted by people that:a, never intend to produce anything, just coast along doing their 9-5b, don't read what they signI have refused to sign several such contracts, some companies will be flexible about it but some won't... At the very least, you can get the clause narrowed in scope so that it:a, only includes inventions which relate to the company business or the business your employed forb, only count things done on company time (ie things your boss t

I've rejected several job offers based on contract terms like that, if people keep doing it they will eventually have to change their terms.

Such terms can often decrease the talent pool too, people who are more in demand can be more choosy about their contract terms resulting in companies with such terms only being able to employee lower quality staff: (those in less demand, those who have no intention to invent anything and thus don't care, those who are too careless to read the contract etc)

I'm an independent consultant, so our equivalent is the "work-for-hire" clause which says everything I do belongs to them. I typically start the statement of work off on my paper/template that says the following:

Client appreciates the value of reusing works created by Consultant at previous engagements and understands the need for the Company to reuse non-confidential portions of works created during this engagement with future clients. Any work, including but not limited to, patentable works; designs; drawings; specifications; models; software; source codes; and object codes, created by Consultant during this engagement shall be provided with a non-exclusive, perpetual, worldwide, royalty-free license, with no rights to sublicense, to use in the context of this engagement to the Client at no additional cost to the Client.

Translation: they get the knowledge I developed at other customers if other customers get the benefit of knowledge I developed with them. When HR/legal tries to change the agreement, I start off by saying these are the terms I use when dealing with IP. If they push harder, I tell them that I'm willing to use their terms, but:

My rate will increase because I can't use this work elsewhere and could potentially be working at another client where my work could be reused and make me more valuable.

My time estimates will at least double since I have to recreate everything I've done elsewhere that I had previously planned on using for this project

When companies realize they get a benefit from not using non-competes, they quickly change their mind, and so far, not one has forced their version of the IP agreement on me.

Having seen then non-competes at Microsoft, Intel, etc. they are appropriately scoped to avoid leakage of trade secrets, but not attrition of employees. Small companies should be doing this (i.e. use non-competes to keep someone from taking your trade secrets and going to work using them at a competitor) but usually they are really just interested in keeping *you.*I believe that non-competes, used appropriately, do more good than harm. However, they are very often abused and on the whole that may not be t

My business has no trade secrets aside from customer lists, etc. Hence we get by just with trade secret protections (no poaching customer, and the like). Non-competes are more or less useless for us.BTW, one thing my business actively does is provide ideas we have in development to third party businesses free of charge. THe reasoning is: in these cases we are involved in core communities of open source projects, and our competition helps us more than it hurts (because they are downstream of us and this

You're right; non-competes reduce competition. You're wrong about "nothing says you have to help your enemies," as we have numerous laws that say exactly that, like the CLEC system with telephone companies.

The issue of trade secrets is a separate one from the issue of non-competes. Trade secret laws could still be enforced without the need for non-competes. Again, like the article says, look at the Silicon Valley vs. Boston thing.

My contract prohibits me from engaging in the same business as my current employer for up to 5 years after termination.

So you can't use your expertise to make a living for 5 years? Or does you contract have your employer paying you severance for 5 years? I'm betting it doesn't. I'm also betting that your employer is happy with the knowledge that he doesn't have to pay you market, or give you decent benefits because if you leave you can't compete with him for 5 years. It's just another form of indentured servitude and you're a willing participant.

Competition is the core of good Capitalism and you agreed not to. Oh yes that's great for your employer, no doubt about that.

In most of Europe (except surprise, surprise, UK) for this to be enforceable they have to pay you for 5 years your normal salary. Nobody in his sane mind does that so nobody tries to put mad clauses about non-compete into contracts. UK is once again one of the few significant exemptions.

It prevents me from working on a project for years and learning about The Next Best Thing and then running to the competition.

I don't normally pay attention to anonymous cowards, but in this case it deserves a response.

What this contract really prevents is your employer keeping you happy and on the job. Does your contract guarantee your benefit plan? Your retirement plan? Cost of living minimum yearly raises? Severance should you be released?

A fair contract is one that benefits both parties. A non-compete only benefits the employee if they get something in return for the duration of the non-compete. If the contract only protects the companies interests then your interests are being thrown out the door. Don't accept their word that they will "do the right thing." If it's not in writing they don't have to and most likely won't.

A non-compete only benefits the employee if they get something in return for the duration of the non-compete.

What the employee gets in return for a non-compete agreement is a job. This offers the opportunity to earn and save money while employed, in order to be able to live off the savings during the term of the covenant not to compete.

nonsense, a person who's worked for three years won't be able to save up enough to live for two more years. The reality is non-competes are more often not upheld. always check the laws where you live, you might be surprised at how enforcement of non-compete varies by nature of work, position level, etc.

My non compete states that I can not work for the competition for 6 months. The competition is basically anyone in the semiconductor industry. I thought that was un-equitable, seeing as I was getting very little in exchange for 6 months of unemployability, so I re-negotiated. I now stay on payroll till they decide I am no longer in possession of trade secrets then will let me go without any non-compete. In a nutshell:If I leave: 6 month non-competeIf they tell me to leave: 6 month non-compete and 6 mont

If so you should expect a significantly higher salary when in jobs with a non-compete. I've yet to see companies asking for non-competes offering a higher salary than those who don't, though I'm sure it happens in some cases.

A non-compete only benefits the employee if they get something in return for the duration of the non-compete.

What the employee gets in return for a non-compete agreement is a job. This offers the opportunity to earn and save money while employed, in order to be able to live off the savings during the term of the covenant not to compete.

</devils-advocate>

What the employee gets for the non-compete agreement is nothing at all. The salary and benefits are in exchange for the work performed.

For example, my reading of the non-compete at Microsoft was simple: If you were an Office developer, and you went to Sun to add MS OfficeOpenXML to StarOffice, then that would be a problem. If OTOH, you went to work at IBM building new features for the Linux kernel that would be OK. If the contract distinguishes between using your employer's trade secrets and working for the competition that is one thing. If it doesn't then it is a form of servitude.

It makes perfect sense though; why fill my head with Trade secrets and methods just to have me open up shop across the street.
Hell, that's how my boss got started. His employer didn't have a non-compete clause and he proceeded to run them out of business.
Competition is the core of good Capitalism but nothing says you have to help your enemies.

Whether you have a non-compete agreement with an employer or not does not address the issue of trade secrets. Unless your former employer gives explicit permission to share trade secrets, you can never share them with any other employer. Period. The same thing applies to source code. Now do people break that rule when they go to another company? Yes, it happens but they open themselves up to litigation. The question is whether non-competes harm innovation by placing an restriction on who can employed.

Maybe. Probably not.The problem is if I hire a developer that comes from a company with a competing product it is highly unlikely the company I hired him away from is going to be able to actually claim something new is the result of "trade secrets" that the developer brought (illegally?) with him. Where would you go to get any sort of evidence of this?

Now, if there is a non-compete agreement that I knowingly violate by hiring the developer, I am putting my company and the developer in trouble. There isn'

One issue is that some employers will label everything as a trade secret when it is more like an operating procedure. An example of a true trade secret would be the recipe for Coca-Cola. An administrative assistant at Coca-Cola offered to sell Pepsi the recipe as well as other confidential information. Now Pepsi could have paid the money and gotten their hands on their rival's most cherished secrets. However, the risk of litigation may have outweighed the benefits to them, and they instead contacted con

Responsible non-competes only attempt to enforce trade secret protection. For example, you may not go to work for a company which competes with us for a period of six months after your employment here if your role at that company would be likely to cause you to use trade secrets you had access to with us.

Note the conditional. Absent the conditional, it is a problem. With the conditional, it is *just* a form of trade secret protection.

My contract prohibits me from engaging in the same business as my current employer for up to 5 years after termination. It makes perfect sense though; why fill my head with Trade secrets and methods just to have me open up shop across the street.

That's their motivation for the non-compete: it's better for them. By the same token, not having a non-compete would be better for you, since you could easily turn around that argument saying "why should I fill their pockets with money just to have them lay me off in bad times". If it's OK for an employer to look after their own interests, then certainly it is OK for an employee, too.

TFA, on the other hand, suggests that the practice of non-competes reduces overall innovation. So what's good for an individual employer is not necessarily best for society at large. So society might have an interest here in looking out for its own, also.

nothing says you have to help your enemies.

BTW, if you view your employees all as potential enemies, you might not be getting their best efforts.

TFA, on the other hand, suggests that the practice of non-competes reduces overall innovation. So what's good for an individual employer is not necessarily best for society at large.

It's not even necessarily good for an employer, however much he thinks he wants it.

An employer wants a non-compete to cut off harmful "outflow" of value. However if the practice of non-competes is legally enforced, then by definition it also cuts off his own beneficial inflow of value. And the direct benefit to an employer of an

And is your job core to that business? Or do you do something that's ancillary to the core business of your employer?Or to put it another way, do you think that, with your skillset, you could earn the same or more more working somewhere else that isn't in the same line of business?If not, then your screwed. Your current company can hold you to ransom, if you decide to leave you can't work in the industry you are trained for and have experience in, you have to do something else for which your not trained, wh

Hell, that's how my boss got started. His employer didn't have a non-compete clause and he proceeded to run them out of business.
Competition is the core of good Capitalism but nothing says you have to help your enemies.

You're making an incorrect jump in your reasoning, that if the action is beneficial for individual party, it must be beneficial for all parties as a whole. That's not [wikipedia.org] always true [wikipedia.org]. It's possible to have situations where if all individuals choose the action most beneficial to themselves, ev

It makes perfect sense though; why fill my head with Trade secrets and methods just to have me open up shop across the street.

The problem with your attitude here is, you're thinking about what's good for the company, not what's good for you. While you won't be able to take any trade secrets if they've had that covered properly (NDA, worst case), why not insist that you retain that ability?

In other words, yes, it would suck for that company if you just open up shop across the street. But if you're anything

Exactly. The fundamental difference between non-compete clauses in employment contracts and DRM is that in most jurisdictions, one of them usually doesn't hold up in law when it matters, while unfortunately the other one apparently does.

It depends. Mostly, overbroad claims are nonsense. However, if you took it upon yourself in your new design job to call clients that you remembered from your two weeks and used knowledge of failings in the first company to lure their clients away, this would probably be actionable.Most often however your non-compete would simply make it difficult to get hired by a new company that clearly was competing over clients with the old company. Unless the new company wants to try to defend in court their decisio

Not useless, they serve to scare people into compliance...A lot of people don't realise non compete clauses aren't enforceable, and thus comply with them out of fear instead of doing the proper research.This deters people from leaving, as they fear they couldn't earn the same level of money elsewhere.

They can't take advantage of the technology they invented, because they can't make enough money on it to cover their overhead, but they sure don't want anyone else to develop it. Non-compete contracts are one way to make sure that doesn't happen.

I think that once a project is abandoned, it should no longer qualify for trade secret protection. However, this does not mean that one should, say, work on a new technology and then take what you built for your employer in order to go into business for yourself unless it is pretty clearly cancelled first. There are some basic ethics involved:-)

'Human capital' obviously does not fit in within the previous literal definition of capital, but phrase 'human capital' absolutely does have real and useful meaning above and beyond mere 'labor'.Capital is a store of value that is used to acquire the means of production (plant and machinery), raw materials and labor that is then used in production of something to be sold on the market.